The Polish president signed the amendment of both the VAT as well as the Tax Ordinance Acts on August 29, 2019. The amendment implements regulations on the so-called new matrix of VAT rates and binding rate information (“WIS”).
Combined Nomenclature (CN)
The amendment will introduce a new list of goods and services, subject to reduced VAT rates. The new list will no longer be based on the Polish Classification of Goods and Services codes (“PKWiU”) from 2008, but rather on the:
- Combined Nomenclature (“CN”) – for goods; and
- current PKWiU from 2015 – for services.
Binding Rate Information (WIS)
In addition, a new institution, the so-called binding rate information (WIS), will be introduced as a beneficial change. The WIS will be an administrative decision issued by the appointed tax authorities, for the purposes of VAT on supplies, imports, intra-Community acquisitions of goods or services. The decision will be issued upon the taxpayer’s request. It shall contain a description of the goods or services which it relates to, classification of the goods according to CN or the services according to PKWiU and the VAT rate applicable to the classified goods or services.
WIS will be issued within 3 months after a payment of a fee amounting to PLN 40.00. The aim of the WIS is therefore, in principle, to provide protection for taxpayers.
VAT rates after changes
- all types of bread and cakes (i.e. from April 1, 2020, products from 19CN) will be subject to a 5% rate;
According to Chapter 19CN: Cereal, flour, starch or milk preparations; confectionery, which includes bread and pastry products. Currently, fresh bread is subject to 5% or 8% rates depending on the “best before” date (limit of 14 days), pastry products are subject to 8% or 23% depending on the “best before” date (limit of 45 days).
- tropical and citrus fruits, some edible nuts, citrus peels or melons – will be subject to a 5% rate, just like all other fruits (currently they are taxed with an 8% rate);
- soups, broths, homogenised and dietetic foods – will be subject to the 5% rate (currently they are taxed with an 8% rate);
- food for infants and toddlers, pacifiers, nappies and car seats – will be subject to a 5% rate (currently they are taxed with an 8% rate);
- hygiene products (sanitary pads and tampons, diapers and insoles for babies and similar products) – will be subject to a 5% rate (currently they are taxed with an 8% rate);
- mustard, sweet pepper, specific processed spices – will be subject to an 8% rate (currently they are taxed at a 23% rate);
- some unprocessed spices (e.g. cumin, turmeric) – will be subject to the 8% rate as other spices, i.e. the rate will be increased (currently they are taxed with a 5% rate);
- lobsters and octopus, other crustaceans, molluscs and aquatic invertebrates (including crabs, crawfish, shrimps) and preparations made of them, as well as caviar and dishes sold in catering establishments, which include the products mentioned – will be subject to the 23% rate (they are currently taxed at a 5% or 8% rate);
- ice – used for food and other refrigeration purposes – will be subject to a 23% rate (currently taxed at an 8% rate).
Although the new VAT matrix will become effective in April 2020, it is advised to prepare for such a significant change in advance. A classification analysis of goods and services is recommended that will allow you to correctly assign them to the new tariff (CN) so as not to make mistakes in the future. If there is uncertainty about the correct classification of goods or services, you will be able to apply for binding rate information from November 1, 2019.